EUROPE – Official hotel supplier to the London 2012 Olympic Games, InterContinental Hotels Group (IHG), has been accused of engaging in uncompetitive behaviour by seeking to prevent online travel agents from discounting its room rates.
The UK’s Office of Fair Trading (OFT) alleged IHG had broken competition law by fixing the price of rooms sold over the internet through Expedia and Booking.com.
The OFT has the power to levy fines, although the finding is, so far, provisional and the companies named have a further opportunity to make formal responses before any final decision.
Many hotel operators sell rooms to agents who then decide on the price they will charge. IHG allows agents to distribute its rooms at an agreed price, on which it pays the agents a commission.
IHG has 661,000 rooms worldwide.
The UK investigation and its result could have wide implications in the industry.
One insider told CMW that there may appear to be plenty of choice in the online travel market, but the reality is that there are lots of different shop windows selling the same rooms at the same prices, with those prices agreed between the big groups and big online agents.
In a statement on the OFT investigation, IHG noted its arrangements with the online booking agents were “compliant with competition laws and consistent with the long-standing approach of the global hotel industry. IHG is co-operating fully with the OFT’s investigation, which commenced in 2010”.
IHG underlined: “Statement of Objections are the OFT’s provisional findings only. All parties will now have the opportunity to respond to the statement before OFT decides if competition law has in fact been infringed.”
CMW sought a view from the UK’s Hotel Booking Agents Associstion (HBAA) and its Executive Director, Peter Ducker, said: “It is widely acknowledged that different business models apply to the varied channels that comprise the hotel and lodging sector, and whether such commercial practices are anti-competitive remains to be seen. For the HBAA, ‘best price guaranteed’ has never been part of our vocabulary as we are servicing a different market to those of the online travel agencies. The allegations of collusion over ‘rate parity’ will be ruled by the OFT and until so the HBAA cannot add further comment.”
Competition Partner for international law firm CMS Cameron McKenna, Susan Hankey, said: “Although the OFT’s announcement directly concerns only a small number of companies, it has taken the unusual step of stating that the issues identified may be industry-wide.
“Beyond the hotel industry any infringement action resulting from the OFT’s investigation could have implications for other online as well as offline traders and might clarify exactly what pricing arrangements may in future constitute enforcement priorities in a complex area of competition law.”
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